The Apple/EMI deal - Now it's up to the consumer to decide

The Apple/EMI deal - Now it's up to the consumer to decide

Summary: When the world changes, even a little bit, it takes a little time to get used to it. Yesterday's announcement by EMI that it was to offer DRM-free music through iTunes was one of those changes that took a little time to get used to. But who's going to benefit from this new era of DRM-free music? My guess is that Apple and EMI will benefit far more from this than the consumer will.

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TOPICS: Apple
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When the world changes, even a little bit, it takes a little time to get used to it.  Yesterday's announcement by EMI that it was to offer DRM-free music through iTunes was one of those changes that took a little time to get used to.  But who's going to benefit from this new era of DRM-free music?  My guess is that Apple and EMI will benefit far more from this than the consumer will.

The main catch in this deal is that DRM-free music will cost more than the DRMed stuff.  Between 25 and 30 per cent more (25% if you live in the UK, 30% if you live in the US).  Why?  I'm not really sure.  I think that "DRM-free music" is somehow being touted as a value-added benefit, and since the bitrate is higher, it's pretty easy to justify jacking up the price. 

Note: This means that $25 buys you 19 DRM-free tunes (leaving you with 49 cents change), while the same cash will buy you 25 DRMed tunes (and leave you with 25 cents).

[poll id=120]

Personally though, I feel that this increase in price is:

  • A "piracy tax" where consumers buying the DRM-free content are being charged extra because a few of these people will abuse the system and make the tracks they buy available for illegal download by others.
  • A sneaky way to raise the cost of tunes.
  • Or, a bit of both.

The clever part to this deal is that Apple and EMI can't lose.  For them, success or failure is a win-win situation.  Why?  Here are just a few of the reasons:

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  • First off, they get a ton of publicity, which is always a good thing. 
  • Second, it silences DRM critics. 
  • The move also silences Apple critics who claim that iTunes is monopolistic and locks out other devices.  Apple is finally unlocking part of the iTunes store to non-Apple devices.
  • This move also takes the DRM argument and puts it firmly in the lap of the consumer.  Do consumers really care about DRM or was the whole debate being fueled by anti-DRM lobby groups?  We'll now get a chance to find out.  If the public do want DRM-free music, they can get it, and have the pleasure of paying extra for it.  If they don't, Apple and EMI can say that they offered it but it wasn't what the public wanted (any future press release along these lines will gloss over the fact that the DRM-free audio costs more).
  • Apple and EMI also get to test whether claims made by the anti-DRM lobby that DRM doesn't curb piracy.  If piracy increases (something that's going to be hard to measure, but I'm suspicious enough to think that these DRM-free tunes could still be tagged in some way to make them easier to spot when they get in the wild) then DRM is needed (or the price of DRM-free content will need to rise further), if it doesn't, well, EMI and Apple have given the public what they wanted.
  • This also puts Apple and EMI's competitors on the back foot.  While this deal isn't exclusively between Apple and EMI and EMI wants to distribute free range content elsewhere, I'm pretty sure that there's going to be scrabbling for deals going on. 

[poll id=121]

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The real issues now are whether the paying public will pay extra for DRM-free content (free-range content if you like), and if they do, will they start rampantly file-sharing (in other words, DRM-free content turns good kids bad)?  Hmmm ... If this is going to work the consumer is going to have to put their money where their mouth is and make it work.  They're also going to have to behave themselves when they get their hands on the content.

Also, keep an eye on iPod sales over the next 12 months.  What kind of effect will disconnecting a part of iTunes (specifically the EMI catalog) from the iPod ecosystem have on sales?  Will this boost iPod sales or send them into decline?  Will Apple see  more iTunes sales or will that also decline?  Stay tuned!

This is an interesting experiment for sure, but I'm not so sure that this is the end of the line for DRM.  Apple or EMI could pull the plug on this at any point and go back to enthusiastically embracing DRM again.  If DRM-free tunes don't sell or if piracy starts to increase (even just a little), then the experiment could (and probably will) come to an end.

[poll id=122]

The future of DRM is down to the consumer.  If you don't want it, get ready to pay for the privilege.

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Topic: Apple

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11 comments
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  • I think the files will be Watermarked...

    With the purchasers iTunes account number. It would be a trivial task for Apple to do this.
    BitTwiddler
  • DRM-free is nice, but...

    What about lossless audio? When I buy a CD, I get a lossless recording I can copy and encode as often as I like with no degradation in sound quality. Not so with downloaded tracks, even at 192 kbit VBR. With FLAC there's even a decent compression algorithm for lossless music.

    Even better, what about 24-bit audio? Lots of master recordings are 24-bit, but we only get 16-bit versions on CD or MP3.
    william.furr@...
  • Re: Will you be willing to pay more for DRM-free content?

    I've said it before, but it bears repeating.

    Yes, but only if by "more" you mean "anything at all."

    I refuse to buy any music encumbered by DRM.
    Letophoro
    • Pay more, but buy only once?

      At least you won't need to buy your music all over again later if the files are DRM-free. But anyway, it's all moot to me because I still buy and rip CDs.

      But I'm curious: do people who buy music over the Internet back their files up by burning them to discs?
      Zogg
  • Good Grief

    Nothing is ever good enough eh?

    I will be buying music off of ITunes that is non-DRM, even for .30 cents more.
    Because I can play it on whatever I want with NO hassles. They just gave me the
    reason I needed to make fewer trips to the CD store and more to the ITunes store.
    (Saves gas, you would spend at least that usually where I live just to get to the
    store, probably more).

    As far as whether more or less people will buy IPods... I don't think IPods sucess
    is tied to ITunes. Everyone is forgetting the fact that you can put non (your own)
    DRM music on the IPod. People buy it for the ease of use and looks. Don't expect
    that to change, why does the Zune suck and statistically no one wants it?

    :-)
    IAHawkeye
  • I'm finally willing to buy music from iTunes

    I believe EMI will see at least a modest increase in sales. The sooner all music becomes DRM free, and the sooner content providers innovate in the way the sell music, the sooner they can reverse the overall decline in music sales.
    P. Douglas
    • Count me in on that one too...

      Now I'm actually willing to go into the iTunes directory. Yay!. I don't mind paying a bit more for DRM-less music. As long as it's not 2 bucks a song. Then I'll still just buy CD's and say screw MP3's
      ju1ce
  • Albums cost the same

    Yes Adrian, it might be a 'piracy tax' and/or a way to increase prices but why, in
    your THREE PAGE entry, have you not mentioned the most beneficial part of
    yesterday's announcement?
    Piot
  • Nixon in China

    As the saying goes "only Nixon could go to China". Only a purveyor of DRM like
    Apple can eliminate it. The record companies found a way to get the variable
    pricing they wanted. Consumers get what they say they wanted.

    Who loses?

    Microsoft.

    Anecdotally, we see the beginnings of this as HP drops Media Center and opts for
    Apple's strategy of breaking out the console.

    The embedding of DRM code deep within Vista will soon be seen as an affront to
    freedoms. The tilt bit doesn't need to be enabled for it's presence to corrupt
    "open" architecture. The purchase of Vista is the tacit endorsement of broad DRM,
    it's that simple.

    FairPlay will remain modular and will continue to keep the purchase of DRM'ed
    content separate from other OS functions. As time goes on, it's possible that DRM
    will commit suicide. It's probably wise to pick an OS that doesn't get dragged
    down with it.
    Harry Bardal
  • Collectors Edition...

    This reminds me of the Collectors Edition, Directors Cut, Boxed Set, etc., marketing scheme where you get people to buy something they already have because this one is new and in some way "better".
    jshaw4343
  • A fairer, more telling question

    [i]Do consumers really care about DRM or was the whole debate being fueled by anti-DRM lobby groups? We'll now get a chance to find out. If the public do want DRM-free music, they can get it, and have the pleasure of paying extra for it.[/i]

    If they offered DRM and DRM-free selections side by side, with all factors (price, quality, selection availability, etc.) being equal, which do you think would sell more? I suspect we'd see 99% to perhaps 1% in favor of the DRM-free flavors (someone tell me I'm wrong here). What would that then tell you about the issue of DRM and the public at large?

    If Apple/EMI really wanted to know, and not merely profit by leveraged sales schemes and a little cheap PR, this is exactly what they'd do. In 3 to 6 months they not only would have their definitive answer, but they could move forward and banish DRM - to include the extra expense and complications that come piggybacked with it - from their company catalog once and for all, citing the collective voice of their consumer base.

    Now how much do you want to bet this isn't really what they want - or need - to know? ;)

    Article is a fairly comprehensive take btw.
    klumper